Big Deal on Screening Tenants!!

25 Replies

Good afternoon BP I hope everyone is doing good today. For those who don't know me I sum up who I am and why I'm on BP real quick, then I'll ask my question.

My name is Carlos Rodrigues and I'm new to this real estate industry but currently studying it and taking ongoing courses for my real estate license. I here so I can keep gaining knowledge in real estate, and ask questions i need guidance on. I'm yet to purchase my first property but I will real soon and I'll be talking about it when the time comes. I first want to have unanswered questions answered so when the time comes I'm ready. Thank you in advance for helping me out, its appreciated.

Okay now to my questions and concerns on screening tenants. I have read BP guidelines on screening and a few other threads, and I definitely learned what people are doing to screen there future tenants.

I'll share what I've learned below, and please add to the list:

- Have a standard on what I'm looking for in a tenant 

- Pre-screening over the phone

- Use good judgement off first impression (how they carry themselves, car they drive, etc)

- Have them fill out a application forms, stating personal info (ss# & DL), rental & employment history

- Background check

- Credit check

- Eviction History

- Get a co-signer?

- Income 3x the rent

- References

(please add on)

1. All this is great to do when screening tenants. But now my issue is I'm not hiring a property management to do this all for me, I'm doing it myself. I'm in New Jersey and trying to purchase in Elizabeth NJ and lease there. And now my question is since giving a application isn't a common thing from what I think, how do I just give them a application and ask them to fill all there personal info. Do I give it to them before or after them seeing the property or only if they're interested in moving in? 

2. Also how can I then get a background, credit check and eviction history (mysmartmove.com) if they don't feel comfortable doing so? 

3. Also in this area theres a lot of illegal immigrants, and no discrimination here I have no problem renting to them, but what would I have to do here? Do I just skip this step? Would you?

4. Also I've heard I can't say no when leasing a property if a tenant wants to live there, but what if it fails my standards? Such as criminal history or bad eviction history. Is this true? Can I decline them without breaking the law? 

5. Can I disqualify them and tell them no if they don't meet the requirements? Maybe they don't get paid 3x the rent or they have a bad eviction record? 

6. Do I put a disclaimer on the application stating something? And would you change them an application fee? Why?

I just need some help and guidance on what to do on some situations. Screening tenants is probably my biggest worry and fear when it comes down to real estate I would think. I don't want problems and that's why I want to make sure I get a potential good tenant. Of course I heard of the 5% eviction rule.

Please if you're able to answer these questions or some of them it would be great!! Tenants bring the cash flow, so screening to me is a BIG DEAL!

Thank you in advance once again!!

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Okay so it seems like I can't deny them for:
-marital status
-sexual orientation
-gender identity
-age
-participation in section 8

So could I now write a clause in the application saying if they don't pass my guidelines I could deny them, and then have them listed? Could and should I do that?

Also if anyone is able to answer some of my other question above, it would be appreciated.

1. Once the phone screen is complete, I will have an idea if they are "acceptable" tenants or not. I also answer all their questions. If they don't meet my standards, I tell them they probably won't qualify, but I still show them the house if interested (I do that so I don't seem as if I am discriminating in any way.) Once I show them the property, I ask if they are interested and if they are, then I give them the application and tell them I will not process the application until the application the fee is paid. I will give anyone interested the application even if I know they won't pass/apply so I do not seem as if I am discriminating. The reason there is a fee is because the website I use to screen charges me.

2. Inform them that there is an application process and it needs to be followed. If they are unable to apply via your provided application, then you cannot rent them the apartment.

3. I don't know the answer so I did a quick search. Here it is:

While asking applicants to provide documentation of their citizenship status during the screening process, and rejecting those who can not provide such documentation, does not violate the federal Fair Housing Act, you may not selectively ask for immigration information—that is, you must ask all prospective tenants, not just those you suspect to be in the country illegally. Reference: http://www.nolo.com/legal-encyclopedia/how-screen-...

4. From how I understand it, you can say no as long as you do not discriminate. Not being able to afford the house is not discriminating, not renting to them because they are handicap and you fear that if they lose their job, it will be difficult for them to find a new job is discriminating. There is a fine line.

4. So, you can say no, you just can't say no because you are discriminating. If they fail standards, such as criminal activity or bad eviction history, you do not have to rent to them.

5. Correct.

6. I charge them a fee because the tenant screening website charges me. Also, make sure you put a statement in your application that states you will check their credit.

Hope that helps.

I have a very detailed application that I send to them when I set up the time for the showing.  I tell them to print it, fill it out and bring it with them to showing.  If they like the place, they can hand it to me and if they don't they can tear it up. I tell them that I process tenants on the order that I receive the applications.

Once I receive the app I then can send them the email link to mysmartmove.com where everything is then taken care of. They pay mysmartmove directly so I'm not dealing with any $$ during this process. 

I also let them know on the credit app that all payments must be made via chase quick pay.

There is a fine line between discrimination and not discriminating however your first priority is protecting your business. When you reject an applicant you never give a reason. You simply state something along the lines that you have selected a more qualified applicant. When, or if, they demand a reason you simply inform them you do not specify reasons and then hang up the phone.

As a landlord you are not, in most jurisdictions, obligated to justify your decision to applicants.

A rejected applicant can not take action against a landlord unless the landlord is stupid enough to verbalise their decision to reject based on identified protected classifications.

As a example in my jurisdiction source of income can not be used to justify an eviction yet the majority of landlords reject all applicants receiving government assistance. It is not legal yet it is standard policy. Discrimination exists in the industry usually to protect the business and other tenants in a complex.

@Carlos Rodrigues I love Smartmove, but you may run into some problems in Elizabeth using it. I used it for a Paterson rental listing i had last year. Many of the applicants objected to paying the $35. Many did not have good credit and it might be tough to find applicants who make 3x the monthly rent in that area. 

If they are on Section 8, which is common in that area, their credit will most likely be bad if they have any credit history at all.

However, the eviction screening by Smartmove picked up on 2 applicants who had prior evictions, that hadn't shown up on their credit reports.

You definitely should have standards, but you have to base it on the area your rental property is in. 

@Mags S. yes I've seen thank you. @Richard Campbell Jr THANK YOU! I'm blown away at your response, great great great information. You answered my questions nice and clear and now I have a better understanding of the screening process. I feel a lot more comfortable screening tenants knowing what I can and can't do. Again thank you for your time and help! @Chris Carollo Thanks for sharing what you do with your screening process, sounds good! @Thomas S. I'm glad Smartmove works great, I obviously never used it but its good to know its worth it! And see I figure that would be the problem of applicants not wanting to pay the $35. I should've asked what do you do if they applicants don't want to pay the $35. I mean I wouldn't mind paying for it but if I have 10 or 20 applicants then its a huge expense. And I understand the zone I'm in and many might not have good credit score especially if in Section 8, but it would be good know. And make a decision on other aspects. I just need to figure out what to do with this application fee, any ideas?

If the possible tenant doesn't want to pay the $35 Application fee to mysmartmove then you probably don't want them as a tenant. I've seen it as a way for tenants to "Self Select" themselves out of the process.  Remind them that you are not making a dollar on this.  You could also refund the fee to the tenant who you chose, deducting it from their first month's rent. 

@Chris Carollo yes that sounds fair. I'll let them know I'm not making money off of them. But if they want to lease the property they have to pay the $35 application fee. And if application is accepted I will refund the $35 upon signing the lease. Thank you!

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@Richard Campbell Jr

Every state has different rules. I would assume that if you do not give a reason no one knows you rejected for low credit and no one would ever know. No letter required. But that is only how I would do business. Every landlord has their own standards and mine only take into consideration what is best for me. 

Hi Carlos,

You are on the right track with your big concern in selecting the right tenant. I invest in NJ as well actually in a neighboring town of Elizabeth - Union. I have an application that I give out as standard operating procedure.

You need to come up with some criteria that you are comfortable with. There are really so many factors that go into selecting the correct tenant. I always have said your tenants can make you or break you so choose carefully... OR as someone else once said on the flip side treat your tenants right - They are buying you a building!  :)

You have every right to decline a potential tenant based on criminal record, past evictions  or if they don't meet your comfort zone as far as income. This is your property and ultimately YOU decide who will be taking possession. There are certain things you CANNOT legally disqualify for such as having children, race, color or religion Etc... These are big No Nos....

Always trust your gut instinct as well. It is not a black and white decision as it takes some experience along with some common sense and good judgment - at least that is what I have found and I have been doing this for some time now.

As far as a disclaimer I don't use one or see the need for one and I do not currently charge an application fee but have considered it.....

Good luck!!

Chris

If you email out your criteria and application to interested people, that will weed most of them out. Yeah, you'll get your occasional crazy that thinks it's unfair to judge them based on their current mortgage(s) being delinquent or that they have aggravated assault/robbery on their records, ignore them.  You'll also get a few that can't believe they have to pay ~30 application fee per adult, ignore them as well.  You'll even get the applicant that has an eviction and wants you to pray about it and see what Jesus thinks of them, ignore them as well.  After you email that info out, you set up a Saturday for all the ones that are interested in seeing the home to come look.  Most of them won't bring a filled out application so bring copies to the viewing (should only take ~30/45 min per individual/couple.

You take any applications, process them and if you don't get any good'ns, repeat.

Hey Carlos, I have rented to undocumented immigrants and usually have a good experience. Of course, you cannot run background or criminal if they do not have documentation. However, I have found this population to be very good in my rentals. Usually they make less complaints and take good care of the property. 

Being bi-lingual is also a plus, you might find yourself in a niche market here. Although, I am not sure what the law says about knowingly renting to undocumented people. That would be interesting for an NJ Property lawyer to weigh in on. 

Good Luck!

@Chris Masons thank you! And I'm actually searching near the area by Kean University preferably and all the way down Elmara and North Ave. I feel like it's a great rental community and the rents there seem to be on the higher which is great! And yes I'll definitely treat my tenants right and make them happy as long as they respect the property. And I'm really happy to know that I can decline them and that a disclaimer isn't needed. I was also wondering do you have an additional copy of your application? It would be great if I could see a templet for some guidance on making my application. You could PM me on here. It would be appreciated, thank you!!